PRINTER'S NO. 2420
No. 1821 Session of 2007
INTRODUCED BY SHIMKUS, McCALL, COHEN, EACHUS, BLACKWELL, GRUCELA, W. KELLER, KORTZ, KOTIK, LEACH, MAHONEY, MANDERINO, MUNDY, MURT, PARKER, PHILLIPS, READSHAW, SIPTROTH, K. SMITH AND J. WHITE, SEPTEMBER 4, 2007
REFERRED TO COMMITTEE ON CONSUMER AFFAIRS, SEPTEMBER 4, 2007
AN ACT 1 Providing for the regulation of home construction contracts and 2 for the registration of certain home builders; prohibiting 3 certain acts; providing for penalties; establishing the Home 4 Builder Guaranty Fund; and providing for claims against the 5 fund. 6 TABLE OF CONTENTS 7 Section 1. Short title. 8 Section 2. Definitions. 9 Section 3. Registration of home builders. 10 Section 4. Procedures for registration as a home builder. 11 Section 5. Application fees. 12 Section 6. Renewal of certificate. 13 Section 7. Proof of registration. 14 Section 8. Home construction contracts. 15 Section 9. Home construction fraud. 16 Section 10. Prohibited acts. 17 Section 11. Unfair Trade Practices and Consumer Protection 18 Law.
1 Section 12. Consumer information pamphlet. 2 Section 13. Regulations. 3 Section 14. Preemption of local registration. 4 Section 15. Home Building Guaranty Fund. 5 Section 16. Claims against fund. 6 Section 17. Procedure for submitting claims. 7 Section 18. Reimbursement of fund. 8 Section 19. Notice of suspension or revocation. 9 Section 20. Exemptions. 10 Section 21. Building standards. 11 Section 22. Repeal. 12 Section 23. Effective date. 13 The General Assembly of the Commonwealth of Pennsylvania 14 hereby enacts as follows: 15 Section 1. Short title. 16 This act shall be known and may be cited as the New Home 17 Construction Consumer Protection Act. 18 Section 2. Definitions. 19 The following words and phrases when used in this act shall 20 have the meanings given to them in this section unless the 21 context clearly indicates otherwise: 22 "Arbitration clause." A process in which a neutral 23 arbitrator or panel of neutral arbitrators is engaged by the 24 parties to settle a dispute between a home builder and a 25 consumer. 26 "Assurance of Voluntary Compliance." As defined in section 5 27 of the act of December 17, 1968 (P.L.1224, No.387), known as the 28 Unfair Trade Practices and Consumer Protection Law. 29 "Bureau." The Bureau of Consumer Protection in the Office of 30 Attorney General. 20070H1821B2420 - 2 -
1 "Certificate." A certificate of registration as a home 2 builder, issued by the Bureau of Consumer Protection, which 3 contains a registration number assigned by the Bureau of 4 Consumer Protection. 5 "Consumer." A person who enters into a home construction 6 contract with a home builder. The term also includes a person 7 who has entered into a contract with a home builder to purchase 8 a new home but who has not yet settled on the purchase of the 9 new home. 10 "Fund." The Home Builder Guaranty Fund established in 11 section 15. 12 "Home builder." 13 (1) A person who enters into a home construction 14 contract with a consumer. The term includes an installer or 15 retailer of a mobile home or industrialized housing. 16 (2) The term does not include the following: 17 (i) A real estate developer who does not construct 18 homes. 19 (ii) A financial institution that lends funds for 20 the construction or purchase of residential dwellings in 21 this Commonwealth. 22 (iii) The manufacturer of industrialized housing or 23 mobile homes, unless the manufacturer also installs 24 mobile homes or industrialized housing. 25 "Home construction contract." An agreement between a home 26 builder and a consumer for the construction of a new home which 27 includes all agreements for labor, services and materials to be 28 furnished and performed under the contract. 29 "New home." A newly constructed residential dwelling unit 30 and the fixtures and structures that are made a part of the unit 20070H1821B2420 - 3 -
1 at the time of construction. The term includes the following: 2 (1) A residential building as defined by the act of 3 November 10, 1999 (P.L.491, No.45), known as the Pennsylvania 4 Construction Code Act. 5 (2) Industrialized housing as defined by the act of May 6 11, 1972 (P.L.286, No.70), known as the Industrialized 7 Housing Act. 8 (3) A mobile home as defined by the act of November 24, 9 1976 (P.L.1176, No.261), known as the Mobile Home Park Rights 10 Act. 11 "Person." An individual, partnership, limited partnership, 12 limited liability company, joint venture or corporation. 13 "Special order material." Any material, product or equipment 14 that is not a stock item and must be specially ordered from the 15 factory or distributor and which is produced or processed for a 16 specific home construction contract. Special order materials are 17 not returnable by the home builder for a refund or credit and 18 have no usefulness for other home construction contracts because 19 they are specially ordered for a specific home construction 20 contract. 21 "Specifications." The plans, detailed drawings, lists of 22 materials, stated allowances or other methods customarily used 23 in the home building industry as a whole to describe with 24 particularity the work, workmanship, materials and quality of 25 materials for each new home. 26 Section 3. Registration of home builders. 27 (a) General rule.--No person shall hold himself out as a 28 home builder nor shall a person build a new home without first 29 registering with the bureau as provided for in this act. 30 (b) Public access to registration information.--The bureau 20070H1821B2420 - 4 -
1 shall maintain a toll-free telephone number from which a 2 consumer can obtain information as to whether a home builder is 3 registered with the bureau pursuant to this act, as well as 4 information that may be obtained on the bureau's website. 5 (c) Confidentiality of personal information.--The bureau 6 shall create a policy for the disclosure of personal information 7 to the public. The bureau may not disclose to the public a home 8 builder's Social Security number, driver's license number or any 9 confidential information prohibited by law from being disclosed. 10 (d) No dual licenses.--A person registered or required to be 11 registered as a home builder under this act shall not be 12 eligible to obtain or renew a license under any of the 13 following: 14 (1) The act of December 12, 1980 (P.L.1179, No.219), 15 known as the Secondary Mortgage Loan Act. 16 (2) The act of December 22, 1989 (P.L.687, No.90), known 17 as the Mortgage Bankers and Brokers and Consumer Equity 18 Protection Act. 19 (e) Liability.--No business entity registered pursuant to 20 this act shall be relieved of responsibility under this act for 21 the conduct and acts of its agents, employees, officers or 22 directors, nor shall any person be relieved of responsibility 23 under this act by reason of his employment or relationship with 24 such business entity. 25 (f) Effects of unregistered status.--No unregistered home 26 builder shall have standing to sue, countersue or raise a 27 defense of nonpayment in any dispute arising from a home 28 construction contract. No unregistered home builder may file a 29 mechanic's lien with respect to the construction of a new home. 30 Section 4. Procedures for registration as a home builder. 20070H1821B2420 - 5 -
1 (a) Application.-- 2 (1) A person shall apply to the bureau in writing, or 3 electronically via a secure Internet connection, if permitted 4 by the bureau, on a form provided by the bureau. The 5 application shall include the following information: 6 (i) For an individual applicant, all of the 7 following: 8 (A) Name. 9 (B) Date of birth. 10 (C) Home address and home telephone number. 11 (D) Driver's license number or an identification 12 card issued by the state in which the individual 13 resides. 14 (E) Business name, address and telephone number. 15 (F) Federal employer identification number, if 16 available. 17 (G) Social Security number. 18 (H) All prior business names and addresses of 19 home construction businesses operated by the 20 individual. 21 (ii) For a general partnership applicant, all of the 22 following: 23 (A) Name of each partner. 24 (B) Date of birth of each partner. 25 (C) Home address and home telephone number of 26 each partner. 27 (D) Driver's license number or an identification 28 card issued by the state in which the partner 29 resides, of each partner. 30 (E) Partnership name, address and telephone 20070H1821B2420 - 6 -
1 number. 2 (F) Federal employer identification number, if 3 available. 4 (G) Social Security number of each partner. 5 (H) All prior business names and addresses of 6 home construction businesses operated by each 7 partner. 8 (iii) For a corporation, limited liability company 9 or limited partnership, all of the following: 10 (A) Name of each officer, manager and general 11 partner. 12 (B) Date of birth of each officer, manager and 13 general partner. 14 (C) Home address and home telephone number of 15 each officer, manager and general partner. 16 (D) Driver's license number or an identification 17 card issued by the state in which the individual 18 resides, of each officer, manager and general 19 partner. 20 (E) Entity's name, address and telephone number. 21 (F) Federal employer identification number, if 22 available. 23 (G) Social Security number of each officer, 24 manager and general partner. 25 (H) The name of each director or each individual 26 holding greater than a 5% interest in the entity. 27 (iv) For an out-of-State corporation, limited 28 liability or limited partnership, the name and address of 29 the entity's resident agent or registered office provider 30 within this Commonwealth and any registration number or 20070H1821B2420 - 7 -
1 license number issued to the entity by its home state or 2 political subdivision of such other state, if applicable. 3 (v) For a joint venture applicant, the name, address 4 and telephone number of the joint venture, as well as the 5 name, address and telephone number of each party to the 6 joint venture. When the parties to a joint venture 7 include business entities, the information required from 8 such entities pursuant to subsection (b) shall also be 9 provided. 10 (vi) A complete description of the nature of the 11 contracting business of the applicant. 12 (vii) A statement whether: 13 (A) The individual or individuals making 14 application, even if doing so as part of a business 15 entity application, has ever been convicted of a 16 criminal offense related to a home building 17 transaction, fraud, theft, a crime of deception or a 18 crime involving fraudulent business practices, as 19 well as a statement whether the applicant has ever 20 filed a petition in bankruptcy or within the last ten 21 years received a final civil judgment entered against 22 the applicant or businesses in which the applicant 23 held an interest that was related to a home building 24 transaction. 25 (B) The applicant's certificate or a similar 26 certificate or license issued by any other state or 27 political subdivision thereof has ever been revoked 28 or suspended pursuant to an order issued by a court 29 of competent jurisdiction and, if so, the current 30 status of the certificate or similar certificate or 20070H1821B2420 - 8 -
1 license. The statement required by this clause shall 2 include the same information with respect to any 3 other business in which the person making application 4 has or has ever had an interest. 5 (viii) Whether within the last ten years the 6 applicant has ever been suspended or debarred from 7 participating in any Federal, State or local program 8 through which public hearing or other assistance is 9 provided to consumers for home building. 10 (ix) Proof of general liability insurance covering 11 personal injury and property damage caused by the work of 12 a home builder. 13 (2) Information requested in paragraph (1)(i), (ii), 14 (iii), (iv) and (v) shall be for a ten-year period, prior to 15 the time of registration. The applicant shall provide 16 information prior to the last ten years or as further 17 clarification of the information provided, if the bureau 18 requests such information. 19 (b) Reporting of multiple registrations or licensures.--Any 20 registered home builder in this Commonwealth who is registered 21 or licensed as a home builder in any other state or political 22 subdivision thereof shall report this information to the bureau 23 on the initial and each biennial renewal application. Any 24 disciplinary action taken in such other jurisdiction shall be 25 reported to the bureau on the initial registration application 26 or, if such action occurred subsequent to submission of an 27 initial application, on the biennial registration application or 28 within 90 days of final disposition of the action, whichever is 29 sooner. Multiple registrations or licensures shall be noted by 30 the bureau on the home builder's registration, and such state or 20070H1821B2420 - 9 -
1 political subdivision thereof shall be notified by the bureau of 2 any disciplinary actions taken against the home builder in this 3 Commonwealth. 4 (c) Change of information.--A home builder shall provide the 5 bureau written notice of any change in the information submitted 6 under this section within ten business days after the change is 7 effective. 8 Section 5. Application fees. 9 Each application for a home builder certificate shall be 10 accompanied by a fee of $300. After completion of the 11 application and payment of the fee, the bureau shall issue the 12 home builder a certificate identifying the name of the 13 individual builder, name and address of the business and a 14 registration number. 15 Section 6. Renewal of certificate. 16 (a) General rule.--A home builder that meets the 17 requirements of subsection (c) may obtain renewal of a 18 registration before the registration expires for an additional 19 two-year term. Once expired, a registration may not be renewed. 20 (b) Renewal application.--At least 60 days before a home 21 builder's registration expires, the bureau shall mail to the 22 home builder the following: 23 (1) a renewal application form; and 24 (2) a notice that states the date on which the current 25 registration expires and the date by which the bureau must 26 receive the renewal application for a renewal to be issued 27 and mailed before the registration expires. 28 (c) Renewal procedure.--The bureau shall renew the 29 registration of each home builder that: 30 (1) Would qualify for an initial registration. 20070H1821B2420 - 10 -
1 (2) Submits to the bureau a renewal application on the 2 form provided by the bureau. 3 (3) Pays to the bureau a nonrefundable renewal fee based 4 on the number of building permits for the construction of new 5 homes issued to the registrant in the preceding calendar year 6 as follows: 7 (i) Ten or fewer homes, $150. 8 (ii) Eleven or more new homes, $300. 9 Section 7. Proof of registration. 10 A home builder shall include its registration number in all 11 advertisements, including business cards, distributed within 12 this Commonwealth and on all contracts, estimates and proposals 13 with consumers of home construction services in this 14 Commonwealth. A home builder shall display its registration 15 number on all properties at which he is performing services 16 pursuant to a home construction contract. 17 Section 8. Home construction contracts. 18 (a) Requirements.--No home construction contract shall be 19 valid or enforceable against a consumer unless it: 20 (1) is in writing and legible and contains the 21 registration number of the home builder; 22 (2) is signed by all of the following: 23 (i) the consumer or his agent; and 24 (ii) the home builder or his agent; 25 (3) contains the entire agreement between the consumer 26 and the home builder, including attached copies of all 27 required notices; 28 (4) contains the date the contract was signed; 29 (5) contains the name, address and telephone number of 30 the home builder. For purposes of this paragraph, a post 20070H1821B2420 - 11 -
1 office box number alone shall not be considered an address; 2 (6) contains the approximate starting date and 3 completion date for the work described in the contract; 4 (7) includes a description of the work to be performed, 5 the materials to be used and a set of specifications that 6 cannot be changed without a written change order signed by 7 the consumer and the home builder; 8 (8) includes the total sale price due under the 9 contract; 10 (9) includes the amount of any down payment plus any 11 amount advanced for the purchase of special order materials. 12 The amount of the down payment and the cost of the special 13 order materials must be listed separately; 14 (10) includes the names, addresses and telephone numbers 15 of all subcontractors on the project known at the date of 16 signing the contract. For the purposes of this paragraph, a 17 post office box number alone shall not be considered an 18 address; 19 (11) except as provided in section 14, provides that the 20 home builder agrees to maintain liability insurance covering 21 personal injury in an amount not less than $300,000 and 22 insurance covering property damage caused by the work of a 23 home builder in an amount not less than $300,000 and 24 identifies the current amount of insurance coverage 25 maintained at the time of signing the contract; 26 (12) includes the toll-free telephone number under 27 section 3(b) and a notice of the right of rescission under 28 subsection (b); and 29 (13) is accompanied by a copy of the consumer 30 information pamphlet established by the bureau and supplied 20070H1821B2420 - 12 -
1 to the home builder pursuant to section 12. 2 (b) Right of rescission.--A person signing a home 3 construction contract, except as provided in the emergency 4 provisions of section 7 of the act of December 17, 1968 5 (P.L.1224, No.387), known as the Unfair Trade Practices and 6 Consumer Protection Law, shall be permitted to rescind the 7 contract without penalty regardless of where the contract was 8 signed, within three business days following the date of 9 signing. A home construction contract that does not contain a 10 notice of this right of rescission is voidable by the consumer. 11 (c) Copy to be provided.--A home builder shall provide and 12 deliver to the consumer, without charge, a completed copy of the 13 home building contract at the time the contract is executed. 14 (d) Arbitration clause.--Nothing in this act shall preclude 15 the court from setting aside an arbitration clause on any basis 16 permitted under Pennsylvania law. If the contract contains an 17 arbitration clause, it shall meet the following requirements or 18 be deemed void by the court upon motion of either party, filed 19 prior to the commencement of arbitration: 20 (1) the text of the clause must be in capital letters; 21 (2) the text shall be printed in 12-point boldface type 22 and the arbitration clause must appear on a separate page 23 from the rest of the contract; 24 (3) the clause shall contain a separate line for each of 25 the parties to indicate their assent to be bound thereby; 26 (4) the clause shall not be effective unless both 27 parties have assented as evidenced by signature and date, 28 which shall be the date on which the contract was executed; 29 (5) the clause shall state clearly whether the decision 30 of the arbitration is binding on the parties or may be 20070H1821B2420 - 13 -
1 appealed to the court of common pleas; and 2 (6) the clause shall state whether the facts of the 3 dispute, related documents and the decision are confidential. 4 (e) Voidable clause.--If a home construction contract 5 contains any of the following clauses, the home construction 6 contract shall be voidable by the consumer: 7 (1) A hold harmless clause in favor of the home builder. 8 (2) A waiver of Federal, State or local health, life, 9 safety or building code requirements. 10 (3) A confession of judgment clause against the 11 consumer. 12 (4) A waiver by the consumer of any right to a jury 13 trial in any action brought by or against the consumer. 14 (5) An assignment by the consumer of or order for 15 payment of wages or other compensation by the consumer for 16 services performed by the home builder. 17 (6) A provision by which the consumer agrees not to 18 assert any claim or defense arising out of the contract. 19 (7) A provision that the home builder shall be awarded 20 attorney fees and costs. 21 (8) A clause by which the consumer relieves the home 22 builder from liability for acts committed by the home builder 23 or the home builder's agents in the collection of any 24 payments or in repossession of any goods. 25 (9) A waiver by the consumer of any rights provided 26 under this act. 27 (10) A provision providing for the automatic or 28 recurring renewal of any provisions of the agreement, unless: 29 (i) the contract establishes a procedure by which 30 the consumer can choose not to renew the provision or 20070H1821B2420 - 14 -
1 provisions, thereby avoiding any new fees or charges, by 2 providing written notice to the home builder via first 3 class mail postmarked no later than three business days 4 prior to any renewal; 5 (ii) such procedure is clearly and conspicuously 6 disclosed in the agreement; and 7 (iii) the contract includes a provision requiring 8 the home builder to notify the consumer of any automatic 9 or recurring renewal, and the consumer's option to cancel 10 such renewal, by mail not earlier than 20 days and not 11 later than ten days prior to the date of any such 12 renewal. 13 (f) Home builder's recovery right.--Nothing in this section 14 shall preclude a home builder who has complied with subsection 15 (a) from the recovery of payment for work performed based on the 16 reasonable value of services which were requested by the 17 consumer if a court determines that it would be inequitable to 18 deny such recovery. 19 Section 9. Home construction fraud. 20 (a) Offense defined.--A person commits the offense of home 21 construction fraud if the person intentionally or knowingly: 22 (1) makes a materially false statement to induce, 23 encourage or solicit a person to enter into any written or 24 oral agreement for home building services or to justify an 25 increase in the previously agreed-upon price; 26 (2) receives any advance payment for home building 27 services and fails to perform or provide such services when 28 specified in the contract taking into account any force 29 majeure or unforeseen labor strike that would extend the time 30 frame or unless extended by agreement with the consumer and 20070H1821B2420 - 15 -
1 fails to return the payment received for such services which 2 were not provided by that date; 3 (3) while soliciting a person to enter into an agreement 4 for home building services, misrepresents or conceals the 5 home builder's real name, the name of the home building 6 business, liability insurance information or home builder's 7 business address or any other identifying information; 8 (4) subsequent to entering into an agreement for home 9 building services, changes the name of the home building 10 business, liability insurance information, the home builder's 11 address or any other identifying information without advising 12 the consumer in writing within ten days following any such 13 change; 14 (5) misrepresents an item as a special order material or 15 misrepresents the cost of the special order material; 16 (6) alters a home construction contract, mortgage, 17 promissory note or other document incident to building a new 18 home without the consent of the consumer; or 19 (7) directly or indirectly publishes a false or 20 deceptive advertisement in violation of State law governing 21 advertising about home building. 22 (b) Grading.-- 23 (1) A violation of subsection (a)(1), (2), (3), (4), (5) 24 or (6) constitutes a felony of the third degree. 25 (2) Where a person commits an offense under subsection 26 (a) and the victim is 60 years of age or older, the grading 27 of the offense shall be one grade higher than specified in 28 paragraph (1). This paragraph shall not be applicable to a 29 person whose sentence would be enhanced pursuant to paragraph 30 (3). 20070H1821B2420 - 16 -
1 (3) Notwithstanding any other provisions of this 2 section, where a person commits a second or subsequent 3 offense described in subsection (a), the offense will 4 constitute a felony of the second degree. For this paragraph 5 to be applicable, the second or subsequent offense must have 6 occurred after the first conviction. Paragraph (2) shall not 7 be applicable to a person whose sentence would be enhanced 8 pursuant to this paragraph. 9 (4) In addition to any other penalty imposed by this 10 act, the court may revoke or suspend the certificate of 11 registration issued under section 5. At the time of 12 sentencing, the court shall state the reasons for such 13 revocation or suspension. A person whose registration has 14 been revoked or suspended may petition the court of original 15 jurisdiction for reinstatement after a period of five years 16 from the date of revocation or suspension, or as specified in 17 the court's order. 18 (c) Jurisdiction.-- 19 (1) The district attorneys of the several counties shall 20 have the authority to investigate and to institute criminal 21 proceedings for any violation of this section. 22 (2) In addition to the authority conferred upon the 23 Attorney General by the act of October 15, 1980 (P.L.950, 24 No.164), known as the Commonwealth Attorneys Act, the 25 Attorney General shall have the authority to investigate and 26 institute criminal proceedings for any violation of this 27 section or any series of such violations involving more than 28 one county of this Commonwealth or involving any county of 29 this Commonwealth and another state. No person charged with a 30 violation of this section by the Attorney General shall have 20070H1821B2420 - 17 -
1 standing to challenge the authority of the Attorney General 2 to investigate or prosecute the case, and if any such 3 challenge is made, the challenge shall be dismissed and no 4 relief shall be available in the courts of this Commonwealth 5 to the person making the challenge. 6 Section 10. Prohibited acts. 7 (a) Specific conduct.--No person shall: 8 (1) Fail to register as required by this act. 9 (2) Fail to refund the amount paid under a home 10 construction contract within ten days of either the 11 acceptance and execution of a return receipt for certified 12 mail containing a written request for a refund or the refusal 13 to accept the certified mail sent to the home builder's last 14 known address if all of the following apply: 15 (i) no substantial portion of the contracted work 16 has been performed at the time of the request; and 17 (ii) more than 45 days have elapsed since the 18 starting date specified in the written contract. 19 (3) Accept a municipal certificate of occupancy or other 20 proof that performance of a home construction contract is 21 complete or satisfactorily concluded with knowledge that the 22 document or proof is false and the performance is incomplete. 23 (4) Utter, offer or use a completion certificate or 24 other proof that a home construction contract is complete or 25 satisfactorily concluded when the person knows or has reason 26 to know that the document or proof is false and is made to 27 accomplish any of the following: 28 (i) Make or accept an assignment or negotiation of 29 the right to receive payment under a home construction 30 contract. 20070H1821B2420 - 18 -
1 (ii) Get or grant credit or a loan on security of 2 the right to receive payment under a home construction 3 contract. 4 (5) Abandon or fail to perform, without justification, 5 any home construction contract. For purposes of this 6 paragraph, the term "justification" shall include nonpayment 7 by the consumer as required under the contract or any other 8 violation of the contract by the consumer. 9 (6) Deviate from or disregard plans or specifications, 10 in any material respect, without a written change order dated 11 and signed by both the home builder and consumer, which 12 contains the accompanying price changes for each deviation. 13 (7) Prepare, arrange, accept or participate in the 14 financing of a home construction contract with knowledge that 15 the home construction contract states a greater monetary 16 obligation than the actual price. 17 (8) Advertise or offer, by any means, to build new homes 18 if the person does not intend to do any of the following: 19 (i) Accept a home construction contract. 20 (ii) Perform a home construction contract. 21 (9) Demand or receive any payment for a home 22 construction contract before the home construction contract 23 is signed. 24 (b) Criminal penalty.--In addition to any other penalty 25 provided by law, a person who knowingly violates any provision 26 of this act for which a criminal penalty is not otherwise 27 provided commits a summary offense subject to the fine 28 established in 18 Pa.C.S. § 1105 (relating to sentence of 29 imprisonment for summary offenses). 30 Section 11. Unfair Trade Practices and Consumer Protection Law. 20070H1821B2420 - 19 -
1 A violation of any of the provisions of this act shall be 2 deemed a violation of the act of December 17, 1968 (P.L.1224, 3 No.387), known as the Unfair Trade Practices and Consumer 4 Protection Law. Nothing in this act shall preclude a consumer 5 from exercising any right provided under the Unfair Trade 6 Practices and Consumer Protection Law. 7 Section 12. Consumer information pamphlet. 8 The bureau shall develop, in consultation with the home 9 building industry, a consumer information pamphlet that sets 10 forth the rights and remedies for consumers as provided for in 11 this act, the toll-free number established under section 3 and 12 any other information that the bureau considers reasonably 13 necessary to assist consumers. The bureau shall provide each 14 registered home builder with copies of this pamphlet to 15 distribute to consumers. 16 Section 13. Regulations. 17 The bureau may adopt rules and regulations necessary to carry 18 out the provisions of this act. 19 Section 14. Preemption of local registration. 20 Registration under this act shall preclude any requirement of 21 payment of a fee or registration or licensing of any home 22 builder by any political subdivision. Political subdivisions 23 shall be permitted to require building permits and local 24 enforcement of the building code for that political subdivision, 25 for which a reasonable fee may be charged. Except for a building 26 permit for construction to be performed directly by a landowner 27 solely for the landowner's own use, the political subdivision 28 may not issue a permit for home building unless the permit 29 includes the home builder's registration number. This provision 30 does not affect a political subdivision's responsibilities or 20070H1821B2420 - 20 -
1 authority under the act of November 10, 1999 (P.L.491, No.45), 2 known as the Pennsylvania Construction Code Act, or the 3 requirements under section 302(e) of the act of June 2, 1915 4 (P.L.736, No.338), known as the Workers' Compensation Act, 5 regarding workers' compensation. This provision does not affect 6 existing licensing standards in effect on the effective date of 7 this act with respect to electricians, plumbers, sheet metal 8 workers, warm air installers and fire suppression workers, where 9 licensing is conditioned on requirements of testing or 10 possession of certificates obtained through specific training in 11 electricity, plumbing, sheet metal work, warm air installation 12 and fire suppression. This provision does not affect standards 13 for liability insurance adopted by a political subdivision prior 14 to January 1, 2006, and which are in effect on the effective 15 date of this section. 16 Section 15. Home Builder Guaranty Fund. 17 (a) Establishment.--The Home Builder Guaranty Fund is hereby 18 established in the State Treasury and shall be administered by 19 the bureau in accordance with this act. All moneys deposited in 20 the fund shall not be considered general revenue of the 21 Commonwealth but shall be used only to effectuate the purposes 22 of this act. 23 (b) Guaranty fund fee.--A home builder must pay a guaranty 24 fund fee of $50 for each construction or building permit issued 25 by a political subdivision. The fee shall be collected by the 26 political subdivision issuing the permit and be in addition to 27 any other fees imposed for a permit. 28 (c) Deposit of guaranty fund fees into fund.--On a quarterly 29 basis, each political subdivision must remit the guaranty fund 30 fees collected to the bureau for deposit into the fund. 20070H1821B2420 - 21 -
1 (d) Minimum balance.-- 2 (1) Payments received under subsection (b) shall be 3 credited to the fund, which shall maintain a balance of at 4 least $2,000,000. If the bureau finds that, because of 5 pending claims, the amount of the fund may fall below 6 $1,000,000, the bureau shall assess each home builder $25. 7 However, under this subsection the bureau may not make more 8 than one assessment in any calendar year. 9 (2) Failure to make payments to the fund as required by 10 this act shall result in suspension of registration. Barring 11 the existence of other grounds for suspension or revocation 12 of registration, the certificate shall be reinstated upon 13 full payment of all required fees. 14 (e) Investment.--The moneys of the fund shall be invested 15 and the interest arising from the investments shall be credited 16 to the fund. 17 (f) Waiver of biennial fund fee.--In the event that the 18 bureau finds that the fund is adequately funded, the bureau 19 shall, during the first month of each fiscal year, adjust or 20 waive any biennial fund fee for the fiscal year. 21 Section 16. Claims against fund. 22 (a) General rule.--A consumer may be compensated from the 23 fund for an actual loss that results from an act or omission by 24 a home builder in the performance of a home construction 25 contract or a violation of this act by a home builder as found 26 by a court of competent jurisdiction, upon the final 27 determination of or expiration of time for appeal in connection 28 with any such judgment or if a consumer is prevented from 29 collecting the entirety of a final judgment as a result of the 30 home builder's filing for bankruptcy protection under Federal 20070H1821B2420 - 22 -
1 law. In the event the bureau and the home builder enter into an 2 assurance of voluntary compliance, which requires payment of 3 restitution to a consumer and the home builder fails to pay as 4 required by the terms of the assurance of voluntary compliance, 5 the bureau shall issue an order of payment from the fund to the 6 consumer. The payment made pursuant to an assurance of voluntary 7 compliance shall be considered a claim for the purposes of 8 reimbursement of the fund; however, subsection (f) shall not be 9 applicable. 10 (b) Acts of subcontractors and employees.--For purposes of 11 recovery from the fund, the act or omission of a home builder 12 includes the act or omission of a subcontractor or employee of 13 the home builder whether or not any express agency relationship 14 exists so long as the subcontractor or employee acted within the 15 scope of the home construction contract. 16 (c) Limitation on recovery.-- 17 (1) The bureau may not provide from the fund: 18 (i) More than $30,000 to one consumer for acts or 19 omissions of one home builder. 20 (ii) More than $200,000 to all consumers for acts or 21 omissions of one home builder unless, after the bureau 22 has paid out $200,000 on account of acts or omissions of 23 the home builder, the home builder reimburses the fund. 24 However, in no case shall any one home builder be 25 indebted, at any one time, to the fund for more than 26 $200,000. 27 (iii) An amount for any attorney fees, consequential 28 damages, court costs, interest, personal injury damages 29 or punitive damages, except as may be provided in an 30 assurance of voluntary compliance. 20070H1821B2420 - 23 -
1 (2) In addition to the limits set forth in paragraph 2 (1), a consumer may not recover from the fund more than that 3 consumer's actual loss, to a maximum of $30,000, for a claim 4 made on one contract. 5 (3) Nothing in this section shall preclude a consumer 6 from recovering or seeking to recover from a home builder: 7 (i) the difference between the amount of the 8 judgment against the home builder received by the 9 consumer and the amount actually paid to the consumer 10 from the fund; or 11 (ii) the difference between the amount a home 12 builder agrees to pay a consumer under an assurance of 13 voluntary compliance and the amount actually paid to the 14 consumer from the fund. 15 In the event the consumer does not receive payment in full of 16 a judgment amount from the fund, the judgment shall be deemed 17 to be satisfied only to the extent of the payment received, 18 and the judgment shall continue in full force and effect with 19 respect to the amount still owed until the consumer receives 20 payment in full. 21 (d) Excluded claimants.--A claim against the fund based on 22 the act or omission of a particular builder shall not be made 23 by: 24 (1) a spouse or other immediate relative of the home 25 builder, or of a party which holds a financial stake in the 26 business of the home builder; 27 (2) an employee, officer, director, partner or other 28 party which holds a financial interest in the business of the 29 home builder; or 30 (3) an immediate relative of an employee, officer, 20070H1821B2420 - 24 -
1 director, partner or other party which holds a financial 2 interest in the business of the home builder. 3 (e) Limitation period.--A claim must be made against the 4 fund within two years after the consumer obtains an entry of 5 final judgment or decree against the home builder and all appeal 6 rights have expired or been exhausted, or, in the case of an 7 assurance of voluntary compliance, within the later of two years 8 of entry into such assurance or one year after nonpayment 9 according to the terms of the assurance. 10 (f) Offer of proof.--In order to recover from the fund a 11 consumer must offer proof to the bureau that the consumer has 12 exhausted all reasonable actions available at law and in equity 13 to collect the unpaid amount of a final judgment. 14 (g) Partial payments for fund integrity.--In order to 15 preserve the integrity of the fund, the bureau may order payment 16 out of the fund of an amount less than the judgment amount or 17 the amount agreed to be paid in an assurance of voluntary 18 compliance. The balance remaining due to the consumer shall be 19 paid from the fund pursuant to subsection (h). 20 (h) Special order of payment.--If the money in the fund is 21 insufficient to satisfy any duly authorized claim or portion 22 thereof, the bureau shall, when sufficient money exists in the 23 fund, satisfy the unpaid claims or portions thereof, in the 24 order that those claims or portions thereof were originally 25 determined. 26 (i) Investigation by bureau.--As provided in section 17, if 27 the bureau pays any amount from the fund as a result of a claim 28 against a home builder, the bureau may conduct an investigation 29 to determine if the home builder is possessed of assets liable 30 to be sold or applied in satisfaction of the claim on the fund. 20070H1821B2420 - 25 -
1 If the bureau discovers any such assets, the bureau may take any 2 lawful action necessary for the reimbursement of the fund. 3 (j) Revocation caused by payment of claim.--If the bureau 4 makes a payment of an amount as a result of a claim against a 5 home builder, the bureau shall revoke the certificate of the 6 home builder and the home builder shall not be eligible to 7 receive a new or renewed certificate until the home builder has 8 repaid such amount in full, plus interest, from the time the 9 payment is made from the fund, except that the bureau may permit 10 a home builder to receive a new or renewed certificate after the 11 home builder has entered into an agreement with the bureau 12 whereby the home builder agrees to repay the fund in full in the 13 form of periodic payments over a set period of time. If the home 14 builder fails to pay in accordance with the terms of the 15 agreement, the bureau shall automatically suspend the home 16 builder's certificate. 17 Section 17. Procedure for submitting claims. 18 (a) Initial claim.--In order to recover from the fund, a 19 consumer must submit to the bureau the documentation required 20 under section 16(f), together with a copy of the judgment and 21 evidence that the judgment has not been appealed or a copy of 22 the assurance of voluntary compliance and a certification that 23 the home builder has failed to pay or evidence that the consumer 24 has been prevented from collecting the entirety of a final 25 judgment as a result of the home builder's filing for bankruptcy 26 protection under Federal law. In the latter event, the consumer 27 shall only be entitled to collect from the fund the amount he 28 was prevented from collecting as a result of the filing. 29 (b) Copy of claim to home builder.--On receipt of a claim 30 pursuant to this section, the bureau shall send a copy of the 20070H1821B2420 - 26 -
1 claim to the home builder alleged to be responsible for the 2 actual loss. The home builder shall file a response or objection 3 to the claim within 30 days of the receipt of the notice of such 4 claim. Failure to respond to the claim shall constitute a waiver 5 of any defense or objection to the claim. The only defense a 6 home builder may raise in his response is a defense of payment 7 in full of the claim. 8 (c) General order of payment.--Except as otherwise provided 9 in this act, the bureau shall pay from the fund approved claims 10 in the order that they are submitted. 11 Section 18. Reimbursement of fund. 12 (a) General rule.--After the bureau pays a claim from the 13 fund: 14 (1) The bureau shall be subrogated to all rights of the 15 consumer in the claim up to the amount paid. 16 (2) The consumer shall assign to the bureau all rights 17 of the consumer in the claim up to the amount paid. 18 (3) The bureau has a right to reimbursement of the fund 19 by the home builder for: 20 (i) The amount paid from the fund. 21 (ii) Interest on the amount at an annual rate of 5% 22 as adjusted by the Consumer Price Index on an annual 23 basis. 24 All money that the bureau recovers on a claim shall be deposited 25 in the fund. 26 (b) Suit for nonpayment.--If, within 30 days after the 27 bureau gives notice, a home builder whose account a claim was 28 paid shall fail to reimburse the fund in full, the bureau may 29 initiate an action against the home builder in a court of 30 competent jurisdiction for the unreimbursed amount. 20070H1821B2420 - 27 -
1 (c) Judgment.--The bureau is entitled to a judgment for the 2 unreimbursed amount if the bureau proves that: 3 (1) a claim was paid from the fund on account of the 4 home builder; 5 (2) the home builder has not reimbursed the fund in 6 full; and 7 (3) the bureau directed payment based on a final 8 judgment of a court of competent jurisdiction or an assurance 9 of voluntary compliance. 10 (d) Withholding of tax refund.--If a person is delinquent 11 for at least one year in making payments to the bureau for the 12 purposes of reimbursing the fund, the Department of Revenue 13 shall credit the amount of any refundable overpayment of tax 14 imposed by Article III of the act of March 4, 1971 (P.L.6, 15 No.2), known as the Tax Reform Code of 1971, against the 16 delinquency in respect to this act on the part of the person who 17 made the overpayment. 18 (e) Bankruptcy proceedings.--For the purpose of excepting to 19 a discharge of an individual or business under Federal 20 bankruptcy law, the bureau shall be a creditor of the individual 21 or business for the amount paid from the fund. 22 Section 19. Notice of suspension or revocation. 23 The Office of the Court Administrator of Pennsylvania shall 24 report to the bureau any suspension or revocation of a 25 certificate ordered by a court. 26 Section 20. Exemptions. 27 This act shall not apply to any of the following persons or 28 organizations: 29 (1) The Commonwealth or any of its political 30 subdivisions. 20070H1821B2420 - 28 -
1 (2) The Federal Government. 2 Section 21. Building standards. 3 All work performed by a home builder under a home 4 construction contract shall comply with the requirements of the 5 International Residential Code and the International Existing 6 Building Code as currently adopted by the Department of Labor 7 and Industry under the act of November 10, 1999 (P.L.491, 8 No.45), known as the Pennsylvania Construction Code Act, 9 regardless of whether a permit or inspection is required by the 10 municipality in which the work is being performed. 11 Section 22. Repeal. 12 All acts and parts of acts are repealed insofar as they are 13 inconsistent with this act. 14 Section 23. Effective date. 15 This act shall take effect in 180 days. H16L48JS/20070H1821B2420 - 29 -